Triage Health Lawhttps://www.triagehealthlawblog.com
Fri, 17 May 2019 21:13:26 +0000en-UShourly1https://wordpress.org/?v=4.9.10Subscribe with My Yahoo!Subscribe with NewsGatorSubscribe with My AOLSubscribe with BloglinesSubscribe with NetvibesSubscribe with GoogleSubscribe with PageflakesSubscribe with PlusmoSubscribe with The Free DictionarySubscribe with Bitty BrowserSubscribe with Live.comSubscribe with Excite MIXSubscribe with WebwagSubscribe with Podcast ReadySubscribe with WikioSubscribe with Daily RotationCourt Again Rules that HHS’s Medicare 340B Drug Price Cuts are Illegal, But Gives the Agency a Chance to “Unscramble the Egg”http://feeds.lexblog.com/~r/TriageHealthLawBlog/~3/pJazFrBfLxU/
https://www.triagehealthlawblog.com/340b-program/court-again-rules-that-hhss-medicare-340b-drug-price-cuts-are-illegal-but-gives-the-agency-a-chance-to-unscramble-the-egg/#respondThu, 09 May 2019 20:07:51 +0000https://www.triagehealthlawblog.com/?p=3655Continue Reading]]>As previously reported, last December the U.S. District Court for the District of Columbia ruled that the Department of Health and Human Services (HHS) had overstepped its bounds when it slashed the 2018 Medicare Part B outpatient reimbursement rates for covered drugs purchased under the 340B Program. AHA v. Azar, 1:18-cv-2084-RC (D.D.C. December 27, 2018). The court, however, held off on imposing a remedy until after the parties first had the opportunity to provide further input. On May 6, 2019, having received that input, the court has now ordered a remedy, which it has also applied to the HHS’s identical reimbursement rate reduction for 2019. The court sent both the 2018 and 2019 rate-setting rules back to the agency to give “it the first crack at crafting appropriate remedial measures” and directed HHS to “resolve this issue promptly.”

The controversy began when HHS, in its annual rulemaking setting Medicare’s outpatient payment rates for 2018, adopted a new rule that changing the amount hospitals would receive for providing covered drugs purchased through the 340B Program. The 340B Program caps the prices drug manufacturers may charge for certain medications. HHS’s new rule dropped the reimbursement rate from the average sales price (ASP) of a drug plus 6% to the ASP minus 22.5%, an almost 30% reduction. Previously, the spread between the discounted 340B Program drug pricing—which the agency estimated averaged 22.5% below ASP—and Medicare Part B reimbursement rates gave 340B hospitals additional funds for providing care to underserved patient populations. HHS’s new rates eliminated that spread and reduced hospital drug reimbursement in 2018 alone by approximately $1.6 billion.

After the 2018 rates became effective, several hospital associations and non-profit hospitals sued HHS over the reduction. As noted, in December 2018, the court ruled that HHS had clearly exceeded its statutory authority with the 2018 rate cut. However, HHS’s 2018 rule had concurrently reallocated the money saved from the 340B Program to increasing payment for other Part B drugs and services. Due to this fact and to other potential administrative challenges implicated by vacating the rule, the court asked the parties to submit briefs on what would be an appropriate remedy.

While the parties were informing the court of their views, the plaintiffs also added an identical challenge to HHS’s 2019 340B payment cuts, which went into effect January 1, 2019. The court again ruled that HHS’s 2019 rate reduction had “fundamentally altered the statutory scheme” and that HHS had clearly acted outside its authority.

However, the court likened crafting a remedy to trying to “unscramble the egg ….” The court rejected the plaintiffs’ request to order HHS to pay hospitals the difference between the former rates (ASP plus 6%) and the reduced rates (ASP minus 22.5%) for all applicable drugs already provided in 2018 and 2019 and to apply the higher rates going forward. Instead, the court found there were multiple possible solutions the agency could implement and sent the rules back to HHS to determine the appropriate remedy. These possible fixes included increasing rates in future years in an effort to “make up for [HHS’s] underpayments in 2018 and 2019” or amending the 2018 and 2019 rules and issuing retroactive payments. The court noted a concern that “there is some question as to whether the agency’s actions must be budget neutral,” meaning that increasing 340B payments might, to the extent lawful, necessitate decreasing and partially recouping payment for the other services that had been increased. The court stated that the agency was in the best position to determine that question on remand and declined to vacate the rules to “allow the agency more flexibility to determine the least disruptive means of correcting its underpayments ….” Finally, the court retained jurisdiction and warned that it “may reconsider the remedy if the agency fails to fulfill its responsibilities in a prompt manner.” Towards that end, the court ordered the parties to submit a status report on the agency’s progress within 60 days.

HHS has already filed an appeal but asked for a stay until there is a final judgment from the district court. We will continue to track this case during the remand and during any appeal. We remind providers that they may want to preserve their ability to challenge 340B reimbursement reductions when filing their 2018 and 2019 cost reports.

If you would like to discuss any of the details or implications of this matter for your business, please speak to one of the individuals listed in this publication or your usual contact at the firm.

]]>https://www.triagehealthlawblog.com/340b-program/court-again-rules-that-hhss-medicare-340b-drug-price-cuts-are-illegal-but-gives-the-agency-a-chance-to-unscramble-the-egg/feed/0sven.collins@squirepb.comhttps://www.triagehealthlawblog.com/340b-program/court-again-rules-that-hhss-medicare-340b-drug-price-cuts-are-illegal-but-gives-the-agency-a-chance-to-unscramble-the-egg/New DOJ Guidance On Credit Under False Claims Acthttp://feeds.lexblog.com/~r/TriageHealthLawBlog/~3/wKV1msVbi7s/
https://www.triagehealthlawblog.com/false-claims-act/new-doj-guidance-on-credit-under-false-claims-act/#respondWed, 08 May 2019 21:07:43 +0000https://www.triagehealthlawblog.com/?p=3649Continue Reading]]>The Department of Justice just released new guidance how to obtain credit for cooperation under the False Claims Act (FCA). The guidance stresses the importance of cooperation but mentions other actions as well. The FCA greatly impacts the health care sector, with settlements and judgments reaching to billions of dollars. Please see the post on the Anticorruption blog for a description of this guidance.

In a recent case, which arose after new owners took over a skilled nursing home facility, the National Labor Relations Board reiterated the standards that will determine whether a buyer must recognize the seller’s former labor union, retain former union-represented employees, and bargain with that union before initially determining the wages, hours, and other working conditions at the organization. Ridgewood Health Care Center, Inc., 367 NLRB No. 110 (Apr. 2, 2019). The Board also clarified an existing rule in a way that will reduce the potential risk for a buyer.

The Board reiterated that, generally, a buyer must recognize the seller’s union if both (a) the buyer operates the organization the same as before and (b) the buyer retains a majority of the union-represented employees.

A threshold question in these situations, when a buyer acquires a unionized entity, is whether the buyer must recognize the union as the employees’ representative. This will not necessarily occur in every situation. As the Board reiterated in Ridgewood, the buyer must recognize the seller’s labor union if (a) the buyer runs the operation essentially the same way as the seller (the “substantial continuity” element) and (b) the buyer hires enough of the seller’s employees that they constitute a majority of the employees in a new appropriate bargaining unit (the “majority” element). Under the facts at issue in Ridgewood, the buyer operated the nursing facility at the same location as before, and provided the same types of services to the same clientele. So, there was no dispute that the buyer satisfied the substantial continuity element. As noted below, however, the majority element can create a more nuanced question.

An employer may not decline to hire union-represented employees in an effort to avoid recognizing the union.

In Ridgewood, the Board also flagged an issue that can create a trap for unwary buyers. The Board reiterated that it is unlawful for a buyer to decline to retain union-represented employees in an effort to avoid satisfying the majority element above. In other words, if the buyer fills an existing position by hiring from the outside, rather than retaining the union-represented employee who previously held the position, the buyer must have a legitimate business reason for doing so (and that reason cannot be a desire to avoid a labor union). If the buyer discriminates on the basis of union membership when it is filling positions, the Board will deem the buyer to have satisfied the majority factor, and the Board also will issue other penalties (including reinstating the employees who experienced discrimination).

In the case at hand, Ridgewood’s new owners had retained just 49 of the 101 union-represented employees before the sale. Thus, on its face, they narrowly avoided satisfying the majority element. However, this ‘narrow miss’ raised eyebrows at the Board, and a Board judge ultimately determined that the employer had declined to hire at least four employees due to their union membership. Accordingly, the Board ordered the new owners to recognize the union as the employees’ representative, and to rehire these four additional employees.

Although the buyer often may set the initial wages, hours, and other terms of employment, the Board clarified when the buyer must bargain first.

The Board also addressed another common question that arises after sales of union-represented entities. At default, even if the buyer operates the organization the same, and even if the buyer retains enough employees to satisfy the “majority” element, that does not necessarily require the buyer to bargain with the union before setting initial wages, hours, and other terms of employment. Rather, at default, the buyer may determine the initial working conditions that will apply after the sale, with the understanding that the buyer may need to bargain with the union after that (unless there is an existing contract).

However, like most Board doctrines, this rule has exceptions. The Board has long recognized that a buyer must bargain with a union before setting initial terms of employment if the buyer makes itself a “perfectly clear” successor. A buyer will make itself a perfectly clear successor if the buyer has said or done something that will cause the union-represented employees to believe the buyer will retain “all or substantially all” of them without changing their wages, hours, or other conditions of employment. Obviously, given this and other rules, buyers should be very careful when describing their plans for union-represented employees.

Finally, in Ridgewood, the Board described how anti-union discrimination will affect this “perfectly clear” successorship doctrine as well. For the past several years, the Board took the position that an employer could become a perfectly clear successor as well (rather than merely having to recognize the union) if the employer discriminated against some union-represented employees when staffing the organization or otherwise proceeding after the sale. In Ridgewood, however, the Board slightly narrowed this rule, and held that an employer’s discrimination would make it a perfectly clear successor only if the discrimination affected “all or substantially all” of the union-represented employees.

Here, where the Board found that the buyer discriminated against four of the 101 union-represented employees, that was enough to require the buyer to recognize the union, but not bargain before setting initial terms and conditions of employment. Nevertheless, a buyer should take care when deciding whether to retain union-represented employees, because any discrimination could create serious consequences.

]]>https://www.triagehealthlawblog.com/labor-and-employment/recent-case-provides-important-lessons-for-buyers-acquiring-unionized-businesses/feed/0william.kishman@squirepb.comhttps://www.triagehealthlawblog.com/labor-and-employment/recent-case-provides-important-lessons-for-buyers-acquiring-unionized-businesses/Sixth Circuit Upholds Ohio Law Defunding Planned Parenthoodhttp://feeds.lexblog.com/~r/TriageHealthLawBlog/~3/My9uY1MW-Vc/
https://www.triagehealthlawblog.com/6th-circuit/sixth-circuit-upholds-ohio-law-defunding-planned-parenthood/#respondMon, 18 Mar 2019 17:03:40 +0000https://www.triagehealthlawblog.com/?p=3634Continue Reading]]>In a closely watched decision, this past week the U.S. Court of Appeals for the Sixth Circuit upheld an Ohio law permitting Ohio to defund Planned Parenthood clinics. See Planned Parenthood of Greater Ohio v. Hodges, Case No. 16-4027 (Mar. 12, 2019).An 11 to 6 majority of the full panel of the Sixth Circuit reversed a district court decision enjoining a 2016 Ohio law that barred Ohio’s health department from funding organizations that perform nontherapeutic abortions. In challenging the law, Planned Parenthood claimed that it would lose $1.5 in annual funding as a result. Specifically, Planned Parenthood claimed that the law violated “the First and Fourteenth Amendments by conditioning government funding on giving up their rights to provide abortions and to advocate for them.”

In reversing the decision of the district court, the panel held that this funding “condition does not violate the Constitution” because the affiliates of Planned Parenthood “do not have a due process right to perform abortions.” Because it held that providers do not have a constitutional right to perform abortions, it did not need to reach the free speech claim.

On February 6, 2019, the Department of Health and Human Services (HHS) published a Proposed Rule modifying the Anti-Kickback Statute safe harbor protection with the aim of lowering prescription pharmaceutical product prices and out-of-pocket costs for (primarily Medicare Part D and Medicaid Managed Care Plan) consumers. With the Proposed Rule, HHS hopes to encourage medication manufacturers to pass discounts directly to consumers and develop a transparent framework for the prescription pharmaceutical product market. A more thorough discussion of the Proposed Rule may be found here.

A lapse in federal funding, or a government shutdown, occurs when Congress and the President fail to agree to a new appropriations bill for oneor more of the federal government agencies. The most recent partial government shutdown, ending in January 2019, affected about 25% of government agencies (in dollar terms). The Department of Homeland Security and the Food and Drug Administration (FDA) were among those agencies whose ability to spend new funds were impacted by the government shutdown. The remaining agencies already funded through enacted appropriations with funds available through the end of September 2019 included agencies such as the Department of Defense and National Institutes of Health (NIH).

This article provides insight on the potential impact of a government shutdown for those contractors or grantees who might be affected by a funding lapse, such as academic medical centers (AMCs) or clinical researchers. Like most government rules, those related to a shutdown have room for interpretation. The bottom line: if you have a federal contract or grant, advance communication with the agency is the best preventative medicine. It is always prudent to ask the agency at the onset of the contract or grant work, and to validate just prior to the likelihood of a funding lapse, about how such an event may affect the specific contract or grant. Read the full article here.

On 31 January 2019, economists at the UK Competition and Markets Authority and London School of Economics published a new working paper on the effect of mergers between NHS hospitals on patient harm, stating that “a hypothetical merger to monopoly would, on average, be associated with a significant increase in harm rates”. These findings have been published amidst several recent NHS hospital merger clearances by the UK competition watchdog, the Competition and Markets Authority (CMA), which we reviewed this blog last year.

At first glance, the effect of competition within the NHS hospital market may appear reduced given certain sector-specific factors such as the fact that it is a heavily regulated sector, it is a public not-for-profit system and capacity constraints prevent hospitals from accepting additional patients (the “customers”, from a competition law standpoint). However, competition has been in place within the NHS hospital market, and even more so since the two reforms in 2003 and 2006 provided patients with greater choice and introduced NHS funding for care in private Independent Sector Treatment Centres (ISTCs). NHS hospital mergers have therefore gained considerable scrutiny from the CMA and, since 2010, all hospital mergers (bar one) were allowed either because the CMA concluded that there was no risk of a substantial lessening of competition (SLC) or on the basis that relevant customer benefits (RCBs) outweighed any harm arising.

This paper, although not representative of the CMA’s views, argues that “a hypothetical future merger between two geographically proximate hospitals would, on average and assuming no offsetting clinical benefits are unlocked by the merger, result in a 41% increase in harm rates”, and “an average hypothetical mergerwould result in extra direct costs of £2.5 million annually to the NHS, in the absence of compensating patient benefits”. To do so, the economists have used a new hospital quality measure to describe harm. Patient harm is recorded if admitted patients experience falls, blood clots, pressure ulcers and urinary tract infections. Until now, studies had mainly focused on mortality and readmission rates. The study uses data between 2013 and 2015, a few years following the reforms which increased the role of competition in healthcare quality, over eight specialties (rather than within NHS hospitals through time).

In recent years, the CMA had shown a willingness to accept efficiencies arguments in hospital merger reviews in an attempt not to obstruct efforts to improve NHS patient care. Numerous RCBs, such as improved waiting times for diagnosis and treatment, improved culture and staff morale, reduced mortality in vascular surgery and reduced length of stay for patients suffering a fractured neck of femur were accepted by the CMA in its recent clearance decisions (on 15 March 2018, 1 August 2017 and 30 August 2017). However, this paper may weigh on its review of future NHS hospital mergers as the economists state that these mergers were cleared “despite most cases involving reductions in the number of alternative hospital trusts from three to two, or from two to one, in a context of generally low demand elasticity and high barriers to entry: factors which would generally give cause for concern.”

The efficiencies/customer benefits arguments may still save a NHS hospital merger as this study assumes that “no offsetting clinical benefits are unlocked by the merger”. Under section 30 of the Enterprise Act 2002, a RCB need not arise in the same market(s) in which the SLC has occurred, but must outweigh the SLC. NHS hospitals must therefore be prepared to present well-evidenced efficiencies/customer benefits arguments which will outweigh the SLC (and, according to this study, the increase of certain patient harms and costs which arise as a result of the SLC) especially when very few competitors were to remain post-merger.

The June 13, 2018 Practical Law Practice Note co-written by Squire Patton Boggs attorneys Mark A. Salzberg, Elliot M. Smith, and John E. Wyand titled “State Legalized Marijuana Businesses and Access to the Bankruptcy Code” was recently updated to reflect recent case law as well as changes to the Controlled Substances Act. The Practice Note discusses the federal statutory scheme governing marijuana, its tension with state laws governing marijuana businesses, and the ability or inability of marijuana related businesses to access the relief provided under federal bankruptcy law.

A new outlook on the most prominent cybersecurity threats in the healthcare industry today and a series of corresponding, risk-prioritized cybersecurity best practices to combat these threats are now available from the Department of Health and Human Services (HHS). More than 150 private sector healthcare and cybersecurity experts contributed to this guidance as part of the task force HHS established in response to The Cybersecurity Act of 2015. Their goal, cost-effectively strengthening cybersecurity in the healthcare industry.

Heightened cybersecurity vigilance is a necessity everywhere today. The healthcare sector in particular, however, has amassed vast amounts of sensitive personal, financial and health information, making it a particularly attractive target.

While this new guidance does not create a new “mandatory” cybersecurity framework, regulators and courts may still defer to it when the “reasonableness” of security safeguards is questioned post-breach in the healthcare sector.

]]>https://www.triagehealthlawblog.com/cybersecurity/healthcare-cybersecurity-best-practices-out-now/feed/0elliot.golding@squirepb.comhttps://www.triagehealthlawblog.com/cybersecurity/healthcare-cybersecurity-best-practices-out-now/Department of Justice 2018 in Reviewhttp://feeds.lexblog.com/~r/TriageHealthLawBlog/~3/dZOvlb8MIt4/
https://www.triagehealthlawblog.com/doj/department-justice-2018-review/#respondTue, 29 Jan 2019 21:48:42 +0000https://www.triagehealthlawblog.com/?p=3590Continue Reading]]>Policy Shifts at the Department of Justice – 2018 in Review provides an easily navigated yet detailed summary of significant developments at the Department of Justice (DOJ) focusing on fraud and abuse. This Alert sheds light on how the policy shifts may affect the health care industry in the coming year. Among the topics of interest to healthcare are: